|
||
|
TWN
Info Service on WTO and Trade Issues (Nov22/04) Geneva, 7 Nov (D. Ravi Kanth) — The World Trade Organization’s Director-General, Ms Ngozi Okonjo-Iweala, wants trade to be included in the nationally determined contributions (NDCs) of Parties under the Paris Agreement on climate change, suggesting that the “trade and investment facilitation pathway” is “part of the solution for achieving a low-carbon, resilient, and just transition”. However, several developing countries seem to be opposed to any inclusion of trade in the climate change agreement, said people familiar with the development. At a press conference held on 7 November in Sharm-el-Sheikh, Egypt, where the Conference of Parties to the United Nations Framework Convention on Climate Change (UNFCCC) is holding its 27th meeting (COP 27), the DG made several allegedly controversial remarks while releasing the WTO’s World Trade Report 2022. She claimed that the flagship report issued by the WTO at the same time as COP 27 suggests how trade can be harnessed as a force multiplier to address climate change issues. Ms Okonjo-Iweala repeatedly said trade is a solution that can contribute to finding solutions that are much needed now at this juncture. Without naming the United States, which is currently devising trade policies aimed at creating new spheres of special trading zones to advance its global security interests, the DG criticized the ongoing attempts at “de-coupling” and increasing “fragmentation” in the global trading system. She said “re-shoring” and “on-shoring” of global trade through “de-coupling” between major trading nations will not augur well for the multilateral trading system, emphasizing that sharing and supplying of crucial environmental goods and technologies will be undermined. The DG warned against the so-called “green” subsidies as set out in the US Inflation Reduction Act of 2022, cautioning that such schemes could result in a “race to the bottom”. She announced that the WTO will soon come out with a “global carbon pricing mechanism” to harmonize policies ostensibly for reducing the carbon content in products that are traded across countries. Ms Okonjo-Iweala also expressed sharp concern over the failure of the developed countries to deliver US$100 billion annually to the developing countries to address meaningful mitigation actions. Developed countries had agreed in 2010 in Cancun to jointly mobilising USD 100 billion per year by 2020 for climate action in developing countries. At the press conference, the DG lamented that the down-payment was not provided as per the COP 15 commitment. Without a “trade roadmap”, she said, climate change cannot be fully tackled. Therefore, the trade component must be fully incorporated into the nationally determined contributions (NDCs). Asked whether she would agree to the notion that “green” subsidies would violate global trade rules, Ms Okonjo- Iweala gave a rather ambiguous reply, saying that “we encourage members to adopt appropriate policies to reduce their carbon emissions by 2030.” However, such policies must not be “discriminatory,” she said, while referring to the subsidies being granted to electric vehicles (EVs) in the US Inflation Reduction Act that was recently passed by the Biden Administration. She said that several countries like the European Union and Korea have complained against the EV subsidy scheme (of the US), suggesting that she would encourage countries to resolve the issue amicably without a formal trade dispute. Significantly, the DG warned that such schemes could also result in a “race to the bottom”, maintaining that it is important to address the climate change issues collectively. The DG said members should resume talks on trade in environmental goods and services that were shelved in 2015. WTO’S WORLD TRADE REPORT “The report argues that trade is a force for good for climate and part of the solution for achieving a low-carbon, resilient and just transition,” the DG said in the foreword to the World Trade Report 2022. According to a statement put out on the WTO website, “the report conveys four main messages: first, climate change is a major threat to future growth and prosperity due to potential productivity losses, production shortages, damaged transport infrastructure, and supply chain disruptions. Furthermore, without significant reductions in global greenhouse gas (GHG) emissions, many countries are likely to find their comparative advantages changing, with agriculture, tourism and some manufacturing sectors particularly vulnerable to climate impacts.” Secondly, the report says that “trade is a force multiplier for countries’ adaptation efforts in the face of climate disruptions, reducing costs of technologies and critical goods and services.” In the longer-run, it said, “open international markets would help countries achieve necessary economic adjustment and resource reallocation”. Thirdly, the report highlights that “trade can reduce the cost of mitigating climate change – by supporting the reduction or prevention of GHG emissions – and speed up the transition to a low-carbon economy and the creation of green jobs.” It said WTO simulations presented in the report suggest that the elimination of “tariffs and reducing non-tariff measures on a subset of energy-related environmental goods could boost exports by 5 per cent by 2030, while the resulting increases in energy efficiency and renewable uptake would reduce global emissions by 0.6 per cent.” Lastly, the report suggests that “international cooperation on trade-related aspects of climate policy is vital for making climate actions more effective, and the low-carbon transition more just, minimizing trade frictions and investor uncertainty.” It shows that, without global cooperation on ambitious climate policies, the world will not achieve the Paris Agreement’s goal of limiting the global temperature rise to well below 2 degrees Celsius. IS TRADE PART OF THE PARIS AGREEMENT? Several developing countries seem to have challenged the DG’s call for including trade in the NDCs. There is apparently no mention of the word “trade” in any COP document until now, said a trade envoy, who asked not to be identified. It is somewhat “disingenuous” for the DG to bring about a linkage between trade and climate change at this juncture, as environment and climate change-related issues are best left to be tackled by the UNFCCC, as per its mandate, the trade envoy said. Also, without a mandate from WTO members to bring trade into the NDCs, the DG is again allegedly flouting the Marrakesh Agreement, the envoy added. The DG appears to have again gone “overboard” by highlighting that “trade and investment facilitation can be a pathway” for addressing climate change. Knowing full well that what is being discussed on trade and investment facilitation is part of the allegedly WTO- illegal Joint Statement Initiative (JSI) plurilateral discussions, the DG has raised a non-mandated issue which she is not supposed to do, as per paragraph four of Article VI of the Marrakesh Agreement. Paragraph four of Article VI of the Marrakesh Agreement states unambiguously that: “The responsibilities of the Director-General and of the staff of the Secretariat shall be exclusively international in character. In the discharge of their duties, the Director-General and the staff of the Secretariat shall not seek or accept instructions from any government or any other authority external to the WTO. They shall refrain from any action which might adversely reflect on their position as international officials. The Members of the WTO shall respect the international character of the responsibilities of the Director-General and of the staff of the Secretariat and shall not seek to influence them in the discharge of their duties.” For some time now, the DG has been promoting a rather controversial proposal for transforming the Aid for Trade (AfT) initiative into “Invest for Trade (IfT)” that seeks to accord a pivotal role for the private sector and private investments. Eventhough the DG’s push appears to be a systemic shift that goes against the 2005 Hong Kong ministerial mandate, she seemed not to be concerned about the inconsistencies in her approach, said a person, who asked not to be quoted. As reported in SUNS #9668 dated 17 October 2022, the DG is allegedly promoting “green and digital technologies”. Recently, she said that “it’s time to move to an Invest for Trade approach” ostensibly “for the least developed countries – a fact recognized in the MC12 Outcome Document.” CARBON PRICING MECHANISM The DG’s announcement at COP 27 that the WTO would soon come out with a blueprint for a global carbon pricing mechanism has also come as a surprise to several countries, said a person, who is aware of the DG’s announcement. The DG’s announcement seems to complement the European Union’s Carbon Border Adjustment Mechanism (CBAM), which was discussed at a recent meeting of the Committee on Trade and Environment (CTE). That the CBAM could adversely affect the production methods of developing countries in sectors such as steel, iron, cement, fertilizer, aluminum, and electricity, is well established. These sectors in developing countries could be forced to purchase CBAM certificates to cover direct carbon emissions embedded in certain products imported into the EU, especially in the above-mentioned sectors. A second phase by the EU is anticipated to cover indirect emissions. A proposal by the UN Conference on Trade and Development (UNCTAD) on a “positive” Trade and Environment Agenda seeks to promote “patent-free green technology transfers; providing additional finance for promoting trade of environmentally sustainable products e.g., through the Trade and Environment Fund; building technical capacities, especially of least developed countries (LDCs) and small island developing States (SIDS), in setting up climate-smart infrastructure; providing incentives like zero tariff regime for plastic substitutes; and ensuring adequate policy and fiscal space for developing countries for designing their trade policies seeking environmental goals.” In short, the DG appears to be embarking on a rather controversial trade and climate change agenda that has so far not been formally approved by members. At a time when the WTO is unlikely to deliver on the commitments made at its 12th ministerial conference (MC12) in June, particularly on extending the decision on the TRIPS Agreement to cover diagnostics and therapeutics by the deadline of 17 December, it appears that the DG’s attempts seem somewhat unwarranted and out of place. +
|
||
